File No. 412.11T54/221.

The American Ambassador to the Secretary of State.

No. 1956.]

Sir: For the information of the Department I have the honor to transmit herewith a copy in translation of the contract made between the Minister of Fomento of the Provisional Government of Mexico, Sr. Alberto Robles Gil, as the representative of the Executive, and Mr. James Brown Potter, as the representative of the Tlahualilo Company, together with a translation of the note from Mr. de la Barra which transmitted the same to me. The signing of this contract closes the Tlahualilo case.

I have [etc.]

Henry Lane Wilson.

The Secretary for Foreign Affairs of Mexico to the American Ambassador.

My Dear Mr. Wilson: Enclosed I have the honor to transmit to your excellency a copy of the contract between Sr. Alberto Robles Gil, Secretary of Fomento, Colonization and Industry, as the representative of the Executive, and Mr. James Brown Potter, representative of the Compañía Agrícola, Industrial, Colonizaclora, Limitada del Tlahualilo, S. A.

The said contract will show your excellency the friendy disposition which the Executive has to favor the company referred to in so far as is possible.

I am [etc.]

F. L. de la Barra.

Contract settling the controversy between the Mexican Government and the Tlahualilo Company.

Contract entered into on the one hand by C. Alberto Robles Gil, Secretary of Fomento, Colonization and Industry, in representation of the Executive of the Mexican Republic, and on the other hand by Mr. James Brown Potter, in representation of the Compañía Agrícola, Industrial, Colonizadora, Limitada del Tlahualilo, S. A. (hereinafter denominated the Company) and the said Mr. James Brown Potter and Mr. Severo Mallet-Prevost, in representation of [Page 1009] the Trustees for the holders of the mortgage bonds issued by the said Tlahualilo Company (hereinafter denominated the Bondholders).

With the object of promoting the cultivation of the lands at present belonging to the Company and which, although open to cultivation, lack the water necessary for their irrigation, and at the same time with the object of putting an end to the differences which have up to this date existed between the said Company and the Federal Government, both parties have come to an agreement, which the Bondholders accept, in accordance with the following clauses:

1. The Federal Government ratifies and confirms in favor of the Company, the water rights belonging to the Hacienda de San Fernando, in the manner and in the terms in which the same are expressed in the Regulations of August 30th, 1909 and in accordance with the interpretation which has been given in actual practice to the said Regulation by the Comision Inspectora del Nazas during the past two years; and the said Government obligates itself to neither alter nor diminish, without the previous consent of the Company, the water to which this clause refers.

2. The Federal Government obligates itself to grant to the Company, within six months from the date of this contract, in perpetuity, a dotation of water which, taking as a basis the Regulation of August 30th, 1909, shall be represented by the following volumes in “tandas,” during the agricultural periods or “ciclos” established by the said Regulation, namely:

  • First period: 5,335,688 cub meters.
  • Second period: 4,198,758.
  • Third period: 5,128,632.

The company shall receive this water preferentially to the other riparian property owners located below the San Fernando Dam, or, in other words, immediately subsequent to taking the water corresponding to the Santa Margarita, San Fernando and San Antonio Canals in accordance with the said Regulation of August 30th, 1909.

To this end, the Government shall acquire such property or properties in the Nazas region as may be necessary in order that the above water may be obtained without altering the present Regulation.

3. The Federal Government ratifies and confirms in favor of the Company, in perpetuity, the water rights which articles fifth, sixth and seventh of the Regulation of August 30th, 1909, assign to the said Company.

4. In case it shall not be able to utilize the Canal intakes and works appurtenant thereto, which the Government shall acquire in accordance with clause 2 hereof, the Company may construct above the Santa Rosa Dam or above the San Fernando Dam, a special canal intake with a dimension of four meters and fifty centimeters in the clear, corresponding to a normal flow of 11.547 cubic meters, as well as the necessary canal and other works appurtenant thereto, in order that it may convey the waters referred to in the said clause 2, to the Tlahualilo Hacienda lands. The sill of such canal intake shall be at an altitude of 1136 meters 12 centimeters if it be constructed above the Santa Rosa Dam, and of 1137 meters 66 centimeters if it be constructed above the San Fernando Dam.

The Government obligates itself to give to the Company all the aid necessary for the acquisition of the requisite land on which such works shall be located, and in the event that the Government shall acquire any property containing works which may be utilized for the purpose mentioned, the Government will cede them to the Company in so far as the Company may need them, and the Government shall also give to the Company, where a canal is concerned, such portions of land as may be convenient, together with a protective zone and right of way of up to 50 meters on either side of such canal in all its length, to the Tlahualilo Hacienda.

5. The Company shall have the right to take its waters indiscriminately through all or any of the Tlahualilo, San Fernando or San Antonio Canals, or through the canal mentioned in article 4, as it may see fit, and may utilize such waters on any lands belonging to it, at present owned by it or in future acquired.

6. In order that it may enjoy its maximum allotment of water, the Company may take through the San Antonio Canal, over and above the maximum volume alloted to this canal, the maximum volume of six cubic meters per second assigned by the Regulation of August 30th, 1909, to the Santa Margarita [Page 1010] Canal; and to this end, the Company may construct the necessary hydraulic works. Upon doing this, the Company shall abandon its Santa Margarita Canal, but it shall nevertheless preserve its right to take the water corresponding to this canal, either at the Santa Margarita or at the San Fernando Dam.

The Company may also construct such hydraulic works as may be necessary in the San Fernando Canal, in order that the latter shall be able to take the maximum supply of 7.34 cubic meters per second assigned to it by the Regulation of August 30th, 1909.

7. In consideration of the confirmations and concessions granted to it in the foregoing clauses, the Company shall desist from the “Amparo” proceedings which it has instituted against the Department of Fomento, and shall desist from all actions, rights and claims which it may have alleged or which it may claim to have against the Federal Government, in its capacity as owners of the Haciendas of San Fernando and Tlahualilo, whether in regard to the use or enjoyment of water or in regard to damages, or in any other respect, on account of the decisions taken up to this date by the Federal Government regarding the distribution of the waters of the Nazas River. In consequence, the Company also renounces the claims presented against the Government of Mexico before the Governments of the United States and Great Britain.

8. The Government will try, although without any commitment on its part, to have the taxes at present paid by the Company reduced by the Government of the State of Durango, to the end that the same may be proportionate to those paid by other similar enterprises of that region located within the State of Durango.

9. The fifteen thousand pesos in bonds of the Public Debt which, according to the provisions of article 14 of the April 14th, 1887 contract between the Government and the Company, the latter deposited in the Banco Nacional de Mexico, shall be returned to the Company together with their unpaid coupons, and the Government will issue the necessary orders to this effect.

James Brown Potter.

S. Mallet-Prevost.

Alberto Robles Gil.